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USD/JPY: retains a bullish stance despite losing the 111 handle

7/11/2018, 10:30:13 AMMarket Analysis
 USD/JPY: retains a bullish stance despite losing the 111 handle

USD/JPY is holding its own below the 111 handle and is in a bullish position, edging its way up the chart of late and penetrating the 111 handle making a fresh two month low overnight before the trade war headlines kick in and made for profit taking. Currently, USD/JPY trades at 110.86 vs a high of 111.01 in Asia/111.35 NY and a low of 110.79. 

News that the Trump administration is planning to publish a list of 'new' tariffs that are to be imposed on $200 billion worth of Chinese goods sent risk lower and the Nikkei opened with a bearish gap, following a good performance in stocks on Wall Street where the S&P 500 gained for a fourth straight day, with most chatter about Q2 earnings season rather than trade tensions.

US data under review

US data was light as traders await the US CPI this week. Meanwhile, analysts at Westpac explained that the US Job Openings and Labour Turnover Survey (JOLTS) showed, "a 200k+ drop in job openings to 6.62mn for May but that comes after a record high 6.84mn in April and comfortably exceeds the number of officially unemployed (6.56mn). The quits rate, which measures the share of employees leaving their jobs voluntarily, rose to 2.4% from 2.3%, the highest since the survey began 17 years ago, signalling strong confidence in employment prospects. The NFIB small business survey edged lower to a still historically very elevated 107.2 in June from 107.8 last month." 

USD/JPY levels

Valeria Bednarik, chief analyst at FXStreet explained that the pair retains its bullish stance according to technical readings in the 4 hours chart, as technical indicators keep heading north within overbought levels:

"The pair advances above its 100 and 200 SMA, which anyway remain directionless. An advance beyond 111.40 should result in further gains up to the 112.00/10 region, the next big static resistance area. Beyond this last, the upside will look more constructive and bulls may push it up to the 113.40/60 price zone during the following sessions."